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Phuket property: What is the secret to successful rentals?
Phuket property: What is the secret to successful rentals?
If your Phuket property will be empty for long periods, you’ve probably considered renting it. Obviously you need to buy the right property in the right place.
Phuket,
Thalang,
Thailand
(prbd.net)
30/09/2011
But there are some other things for you to consider….
Villa or Apartment?
This is simple supply and demand. Well, almost.
There are a lot more apartments for rent in Phuket than villas.
So if you buy an apartment you’ll have more competition. This affects what you can charge - especially out of season.
There is a large demand for villas - especially during high season. So you will have less competition on price.
In fact - at the high-end - I’d even say there was a shortage of rental villas during high-season.
But there are a few other things you should think about.
Maintenance costs are usually lower for apartments. And the management company will look after the common areas and buildings.
Remember, a villa comes with extra costs for gardening, pool cleaning and exterior maintenance. These are on-top of your management and common area fees.
So check out ALL the costs so you know what your bottom line will be.
And obviously - consider your personal preference if you will be staying there.
Are guaranteed returns a good thing?
As you probably know, some developers in Phuket now offer ‘guaranteed’ returns from 6% to 8%.
You’ll get 30 to 60 days a year to use your property. And the management company will take care of your rentals for you.
But make sure you buy from a reputable developer. There have been a few cases of developers not paying the rental guarantee at all.
The downside?
There are often blackout periods when you can't use your property.
These are usually at peak periods like Christmas, New Year and Chinese New Year.
If this doesn’t suit you - you may prefer to rent your apartment using local agents.
And ask the developer for a discount equal to the rental guarantee.
Branded vs. Non-branded
These days, you can buy property at several branded hotels and resorts in Phuket.
On the plus side - you are likely to get higher occupancy due to the brand.
The hotel staff will take care of all your marketing, check-in, check-out, maintenance, pool cleaning and maid service.
They’ll also make sure you are paid on time.
Branded properties usually offer a rental program and sometimes a guaranteed return.
And there are often lots of facilities for you and your guests - sometimes even a golf course.
Drawbacks?
You may have to give a minimum of 60 days’ notice before you can use your property. So you can't just turn up - even if your property is empty.
And you will often pay much higher common area and management fees.
In fact, sometimes the fees are so high they will wipe-out any rental income you make.
Again - make sure you know what your bottom line is.
If there is no rental guarantee - ask to see occupancy rates, average rental rates and average fees.
How much did owners of similar properties make in rental income over the past few years?
With a property on a non-branded estate - your costs are likely to be far lower.
But your rentals will be more hit and miss.
And you’ll need to hire a local management company to take care of arrivals, departures, maid service, pool cleaning, gardening and maintenance.
Short term or long term?
Short-term rentals generally mean you can charge higher rates.
But you need to be constantly marketing. And you will have times when your property is empty.
There is often much more wear and tear on properties which are used for holiday lets.
And you will also have more competition.
If you rent long term - your income may be less each week but it will be stable.
Your guests are also more likely to take good care of your property. So your maintenance costs will usually be lower.
If you want to know more about renting your Phuket property…
You can read more in chapter 9 of my book ‘The Definitive Guide to buying property in Phuket’
Best,
Rebecca
About
Phuket Ocean Villas specialise in luxury ocean view property in Phuket, Thailand. We have a superb and extensive portfolio of luxury property in Phuket, available in breathtaking locations throughout the island, including new property, resale property and land.
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